Preventing procurement friction: How to attain approval when purchasing HR software

In the past three years, consensus building has come under greater scrutiny as an effective leadership trait. Commentators such as Meghan M. Biro have acknowledged that, whilst we still associate consensus building with success, it is not the only way to lead. Others push further and argue decision-making based on consensus is a bad idea. This is certainly food for thought as HR leaders aim to increase the strategic impact of their profession. And yet, there is no doubt that consensus-building is vital when it comes to smoothing out the friction between the purchase and procurement of HR technology.

When budgets tighten and buying cycles stretch out, winning approval is a non-negotiable for HR leaders to get their hands on the technology they desire.

In HRD’s latest Decoding HR Tech Q&A with William Tincup, we explore how HR leaders can protect long-term and business-critical investments in technology that promises to elevate employee experience and enhance HR effectiveness.

1) What friction arises between HR leaders and the procurement team when acquiring HR software?

William Tincup: Beyond smaller purchases that fall under budget, the HR team will have to work with a procurement team under finance or accounting. After that price threshold, when buying HR tech that ties to other enterprise software across finance, marketing, sales, operations, or another division, you’re not just buying HR software. It becomes convoluted because HR software has to plug into all your other systems.

So, when a HR team sees a piece of technology at a CIPD conference or sits through a great demo, they then must go through this team. Having decided they want to purchase a piece of technology they then have to sit through a multi-stage approval process. It’s not enough for the HR team to have fallen in love with a piece of technology.

2) How do economic uncertainty and budget constraints impact this decision-making process?

William Tincup: At a time like this, procurement teams hit pause. HR no longer plans to hire 1000 employees this year so doesn’t need a new recruitment marketing application or chatbot. If we have CareerBuilder, but we’re not hiring, then let’s roll down the contract.

The budget is pulled back. Moreover, HR is conservative and cautious, especially if their managing risk for the organization. The exceptions are payroll technology, benefits, and anything to do with high-potential or high-performers.

But this also applies to new technology. Everything hits pause, and procurement teams focus on the shorter-term priorities of the organization, rather than HR’s long-term goals.

3) What strategies are effective in aligning the HR team and the procurement team?

William Tincup: Start by defining whether the tech is a nice-to-have or a need-to-have. Get your team involved in the demos, whittle your list of providers down from ten to three to one, and make sure everyone is on board with the pros and cons. Build a business case. Build consensus.

RFPs get a bad name but they’re a checklist that will be useful when you speak with the approval team. When they ask you a battery of questions, you can refer to the checklist for each vendor and present a clear business case with the consensus of your team behind you.

4) What collaborative practices have proven helpful in streamlining buying journeys of HR software?

William Tincup: HR should always look at a three-year plan. Convey your intent to buy new technology for the next year. If in 2024 you’re planning a major transformation around project management, sow the seed in 2023. You’re telegraphing to the CFO, CRO, CEO, and everyone else at the table your plan for the years to come. Conveying those themes to procurement, accounting, finance, and your own teams creates consensus and support ahead of time. HR could learn from sales who do a wonderful job of telegraphing what they will fix in the sales process.

The best HR leaders have a great relationship with the C-Suite, but also with ops and finance. They bring clear data to their conversations and an understanding of the business. The same goes for building bridges with your Chief Procurement Officer or equivalent. Play the game and build that solid, foundational relationship before you need something from them.

5) How will the relationship and decision-making processes between the HR team and the procurement team evolve in the future?

William Tincup: HR leaders will have more pressure from the CIO and other executives concerned with data and analytics. HR can no longer purchase a tool that works perfectly but is siloed off in HR. Eradicating HR’s data siloes is a very important step. It will help organizations see what we can’t currently see. As a result, approval and procurement teams will have more questions about product integrations. HR leaders should add questions to their RFP checklist that confirm whether their tool will fit into the organization’s ecosystem.